News and Views

Investment Rarities’ President Jim Cook explains “The Origin” of Ted Butler’s views, which “are now widely accepted and have become the main silver story,” and interviews Izzy Friedman, the man whom Butler calls his mentor. “On several occasions in the past we’ve published articles by Izzy Friedman,” writes Cook. “Years ago Izzy asked Ted to figure out why silver’s supply and demand fundamentals weren’t reflected in the price.  Izzy pointed out that we were consuming more silver than we were producing.  Ted checked out Izzy’s facts and discovered that he was right.  That was 1985.  Over the next few months, Ted wrestled day and night with the problem of why the silver prices didn’t reflect the true supply and demand.” Read more… Related Links: Ed Steer:  JPMorgan et al pull the pin Got Gold Report:  Half long gold and watching silver Silver Investing News:  Silver prices slashed by U.S. economicContinue Reading
July 28, 2010

Sell-Off, Buy-Back

Analyzing Tuesday’s drop in gold and silver prices of 2.1% and 3.2% respectively, Mineweb‘s Lawrence Williams writes that “The steep fall yesterday looks as though it may have been precipitated by short selling on COMEX with a big growth in short selling ahead of August options expiry – although other observers put the drop down to the better U.S. housing figures. But, we have pointed out here before that short selling seems to accelerate ahead of option expiry dates which some observers feel is evidence of market manipulation by the bullion banks, followed by recovery as they buy back at the lower price levels.” Related Links: Mish’s Global Economic Analysis:  New home sales and bear market math Financial Times/Alphaville:  About that gold sell-off… Expected Returns:  Embrace the sell-off in gold Afraid to Trade:  Gold finally takes a tumble – Levels to watch Fund My Mutual Fund:  Gold (GLD) struggling GATA: Continue Reading
July 27, 2010

Holdin’ is Golden

In an interview headlined “Eat, pray and hold gold,” The Gold Report speaks with “old-school straight talker” Ron Struthers: TGR: You quote a stat in another Struthers Resource Stock Report that says 90% of short-term trades lose money. You also stick to the old adage that says, “The trend is your friend.” With those two points in mind, what are some long-term trends you see in the gold sector? RS: Obviously gold itself; it’s been in a bull market for 8–10 years, depending on how you want to measure it. We basically don’t sell or trade our gold. We just buy and hold it. We’ve been increasing the percentage held; we were at 0%, then 5%, 10%, 15%. We are just going to hold it until I see some good signs that the market is peaking out and reversing. Then, of course, we’ll be selling. TGR: In that 15%, whatContinue Reading
Barron’s delivers an upbeat assessment of silver in “Next Belle of the Ball?,” which quotes Robert Quartermain as pointing out that “unlike gold, in which central banks hold a sizable position and can cap price increases by selling [ or swapping ] into the market, the only identifiable supplies of silver are with exchange-traded funds and metals exchanges like the Comex, Quartermain says. With only 889 million ounces produced last year, ‘if there’s some escalation in price, there’s nothing there to slow it down,’ he says.” The article identifies Quartermain as simply “a precious-metals investor,” but he has been a major figure in the silver mining industry, as the CEO of Silver Standard for 25 years, before retiring last January. And in a 2009 interview, The Daily Bell described him as “legendary in the field of silver mining.” Additional Links: Got Cold Report:  LCNS for gold falls over 73,000 contractsContinue Reading
“The improvement we got in gold was kind of off the charts,” says Ted Butler, speaking about the reduction in the net short position for large commercial traders, as reflected in the latest COT report.  And Harvey Organ, at his Daily Gold, called it “the most bullish COT report that I have seen for gold in quite some time.” “They’ve taken out 75,000 contracts net in three weeks, and 10,000 in silver,” says Butler. “These are big three-week declines, some of the biggest on record…. I know it comes in stark contrast to what technical indicators may be saying, but that’s the nature of the Commitment of Traders.  It’s a contrarian indicator.  When everything looks junky in terms of price outlook, the COT is generally at its best, and it’s flashing green in both gold and silver.” Butler also says that CFTC Commissioner Bart Chilton “seems to be coming aroundContinue Reading
While the easing of silver prices may be “giving the bears the opportunity to call lower and lower price levels,” they’re also “about to shoot themselves in the foot once again,” according to a SafeHaven article: “Note that silver has returned to take tea with its 200dma, a return to more of a normal position on charts, if there is such a thing. Don’t expect this window of opportunity to show itself for too long, its a window of three to four weeks only, setting the stage for a buying spree as the fall arrives.” And as a Commodity Online article declares that “It is time for silver hunting,” a Seeking Alpha post asks:  “Where is the silver?…. With the price of gold hovering near 67 times the price of silver, a logical deduction must be that silver is much more abundant, and easy to acquire than silver. To theContinue Reading
July 22, 2010

Bad Form

An issue raised by Numismatic News in late June, in an article headlined “$600 Sale? Get Ready for Tax Form,” goes mainstream with an ABC News report, “Gold coin sellers angered by new tax law.“: “Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.” The provision, contained in Section 9006 of the health care bill passed in March, has already drawn fire from the National Taxpayer Advocate, a citizen’s ombudsman within the IRS, who warns that it “could prove to be an unacceptable added burden for small businesses,” and questions its effectiveness in closing the tax gap. Rep. DanContinue Reading
As The Daily Bell ponders “The Genius of Bernanke,” Gold Scents’ Toby Connor, examining gold’s intermediate and daily cycles, suspects that “the Fed’s extreme monetary policy is acting to stretch gold’s intermediate cycle slightly. As you can see from the chart, gold is now about to enter the 24th week of the current intermediate cycle. This of course means it’s becoming extremely dangerous to sell gold. On the contrary, this is the time where savvy investors want to be looking to add to positions. Remember, this is a secular bull market after all, and you only get this kind of opportunity about every 5 to 6 months.” And referring to the above graph that shows the monthly average annualized increase in gold from 2001 to 2009, Casey Research’s Jeff Clark points out that “In our current 9-year bull market, June and August have seen the lowest average return for gold,Continue Reading
“The accumulation pattern on the above chart is nearly complete,” writes James Turk.  “All silver needs now is one last push above the neckline around $20.  As I noted back on April 1st, silver looks ready to soar once that key level is hurdled. In presenting my outlook for 2010 I said: ‘We need to start thinking about silver hurdling above $50…. That forecast remains on track, but two events are necessary.  The obvious one is that silver must first hurdle above $20, but secondly, silver needs to approach $30 this year.  This $30 price target is needed to keep silver on track for challenging $50 next year.” And Ted Butler, in a snippet from his premium subscriber service, posted on The Golden Truth, writes that “By definition, all manipulations end suddenly and violently in price. I am convinced that the silver manipulation will end with the most violent moveContinue Reading
July 19, 2010

The Paper-Money Bubble

Zero Hedge provides some background for King World News‘ interview with Hinde Capital’s Ben Davies, in which he speaks of the “unimaginable price possibilities for the final culmination of the gold bull,” Russia’s gold reserve accumulation, and the likelihood that “there will be a standardization, a basket of currencies somewhere in the world, that will then become a competing reserve currency very quickly overnight.” And in an article for King World News, Davies writes that “The anti-gold crowd are right insofar as they have identified a bubble.  It is not, however, in gold.  Rather it is paper money, in which gold happens to be priced, that is the bubble. Compared to watered-down money, gold looks much undervalued.” Related Links: Investment Postcards:  Marc Faber – Central banks to “print money like crazy” New York Times:  Paralyzed by debt SafeHaven:  The debt supercycle Business Insider:  The 60-year-old world credit bubble that couldContinue Reading
July 17, 2010

Banking on Collusion

Ed Steer writes that “there was nothing free market about what happened in both the gold and silver pits [Friday]. This was all collusively orchestrated by the big bullion banks…. It took Ted Butler quite a number of years to pound into my brain that what happens anywhere else in the world as far as the precious metals are concerned, is totally irrelevant. The price is always set by the big bullion banks… led by JPMorgan in New York.” Here’s one possible solution. In his weekly interview with King World News, Butler points to a positive development on Friday, in that “we did have some clean out” in the total dealer net short position for both gold and silver, according to the latest COT report, — analysis here and here — although “nothing like last week, the dramatic improvement that we had, particularly in gold.” And while “you can’t ruleContinue Reading
BullionVault features a review of  “Alchemists of Loss:  How modern finance and government intervention crashed the financial system,” — excerpts here — by economic writers Kevin Dowd, and Martin Hutchinson, who authors the Prudent Bear‘s “Bear’s Lair” column, and is a contributor to Reuters Breaking Views: “Dowd and Hutchinson show beyond all reasonable doubt how the financial centre of the economy has become one massive rent extraction machine where gains are privatised and the losses are socialised — paid by the likes of you and I, the hapless taxpayer. The bailouts are unquestionably the biggest examples of this. No other industry on the whole planet would get this treatment.” And they conclude “that excessive bails outs funded by deficit spending leads to government debt crises, which is ‘solved’ by either monetisation of the debt (inflation), or straight forward sovereign debt default.” Related Links: Goldman, Gold, and Silver New York:  GoldmanContinue Reading